China's Consumer Confidence Rises on Low Inflation
China’s consumer confidence in the first quarter rose to its highest level since 2005 due to easing inflation and cooling property prices, according to a Nielson survey released Thursday.
The quarterly consumer confidence index of 110, a 2 point increase over the previous quarter, makes China the fourth most optimistic of 56 markets measured.
“The government’s firm support for small and medium-sized enterprises through expansion of credit, shifting policy to boost domestic consumption and demand, and continued enforcement of restrictions designed to deflate the real estate bubble are all contributing to consumer optimism,” said Nielsen Greater China president Yan Xuan.
In April the consumer price index (CPI), the main gauge of inflation, eased to 3.4% year-on-year from 3.6% in March, according to the National Bureau of Statistics.
Inflation may ease in the first three quarters, while rebounding slightly in the last, the NBS report said.
GDP growth slowed to 8.1% in the first quarter, the fifth decline in a row, but economists say the trend won’t continue.
“The leading economic indicators we monitor have been stabilizing, indicating a further sharp growth fall is not likely,” said Pan Jiancheng, deputy director of the China Economic Monitoring and Analysis Center, a research unit of the NBS.
Economic growth will recover due to an export rebound, property sales and stronger fiscal spending, Deutsche Bank AG said in a recent research note. The bank adjusted the 2012 GDP growth forecast to 8.5%, down 0.1% from an earlier projection.
Rural consumers, who number 650 million, are the most confident section of the population, in part due to the government’s push to develop rural areas. The measures include raising subsidies for health insurance for farmers and plans to allocate more funding to rural areas this year. That rural confidence has translated into a surge in sales of consumer goods.
The survey also showed that optimism on job prospects rose 5% and expectations for wage increases rose 3%.
But the percentage of people who say they are saving all spare cash rose to 59% from 56% in the 4th quarter of 2011. Nearly half of respondents reported applying any spare cash to education savings for their children.